Private equity firm 3i in £732m rights issue

3i Group, Britain's biggest listed private equity group, launched a £732million ($1.10billion) rights issue on Friday saying it would use the money to pay down debt and bolster its balance sheet.

The company said it would issue just over 542 million new shares at 135 pence each which is a 60 per cent discount to Thursday's closing price of 339 pence and a 39.8 per cent discount to the theoretical ex-rights price.

3i Group, which had net debts of £1.1billion at the end of March, also said it believed the underwritten nine for seven rights issue would improve its access to financing.

Tactics: CEO Michael Queen said the move 'will position us well to take advantage of investment opportunities as
they emerge.'

'This rights issue builds on a number of actions we have been
taking,' Chief Executive Michael Queen said in a statement. 'It will
strengthen not only our balance sheet but also our market position and
will position us well to take advantage of investment opportunities as
they emerge.'

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J.P. Morgan Cazenove and Merrill Lynch are acting as joint coordinators, bookrunners and sponsors of the issue.

Highlighting the headwinds 3i is facing, the company said in a
separate statement on Friday that its net asset value per ordinary
share slid to £4.96 in the year to the end of March 2009 from £10.77 a
year earlier.

Total assets under management fell to £8.02billion from £9.79billion a year earlier.

The company said that given the rights issue it would not be paying a final dividend.